PHL dollar reserves rise to $108.54B as of end-March on gold, forex holdings

THE country’s dollar reserves climbed in March after slightly dipping in the previous month due to gold and foreign exchange holdings.

Data from the Bangko Sentral ng Pilipinas (BSP) said the country’s gross international reserves (GIR) level rose to $108.54 billion as of end-March 2022 from the end-February 2022 level of US$107.8 billion.

It is also higher than the $104.48-billion level in end-March last year.

The country’s GIR is the level of foreign exchange holdings being managed by the central bank during a given period. The GIR is a crucial component of the economy as it is often used to manage the country’s foreign exchange rate against excess volatility.

The BSP said the latest GIR level represents a “more than adequate” external liquidity buffer equivalent to 9.6 months’ worth of imports of goods and payments of services and primary income. 

Moreover, it is also about 7.2 times the country’s short-term external debt based on original maturity and 5.4 times based on residual maturity.

The BSP attributed the month-on-month increase in the GIR level mainly to the National Government’s (NG) net foreign currency deposits with the BSP, which include proceeds from its issuance of ROP Global Bonds, and the BSP’s net income from its investments abroad.

Rizal Commercial Banking Corporation (RCBC) Chief Economist Michael Ricafort said the country’s GIR is projected to continue rising this year and may even reach an all-time high. 

“Continued inflows of the country’s structural US dollar inflows, even with year-on-year declines for some of them, such as OFW [Overseas Filipino Workers] remittances, BPO [Business Process Outsourcing] revenues, POGO [Philippine Offshore Gaming Operator] revenues, foreign tourism receipts (some fully vaccinated foreign tourists again allowed in the country after nearly two years), foreign investments may still be added to the country’s BOP [Balance of Payments], as well as to the country’s GIR; thus, new record highs for GIR still possible in the coming months,” Ricafort said.

“Near record high GIR may further strengthen the country’s external position, which in turn, fundamentally supports the country’s favorable credit ratings as seen recently,” he added. 

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